Muhamad Abduh

Factors influencing international students' choice towards universities in Malaysia

This paper is aimed to determine factors influencing international postgraduate students in choosing university in Malaysia. Factors such as programs offered, fees, promotion, facilities, prominence, environment, convenience, and scholarship were utilized. A total of 135 international postgraduate students were involved in this study through a direct survey. The percentage technique to extract the information of respondents’ demography was used. Then, the analytic hierarchy process was employed to evaluate the level of importance of each factor. The study found that “programs offered” is the number one factor which influences overall international students’ choice to opt for a postgraduate study in Malaysia universities. There were some differences between students from Asian and Western countries in ranking the importance of those factors. Overall categories of respondents selected “tuition prices”, “facilities”, and the “academic staff prominence” as the preceding factors to follow the “programs offered” factor in a sequential level of importance. In general, the result reflects the awareness of prospective students towards the expected standard of education required from the higher education industry.

The Role of Awareness in Islamic Bank Patronizing Behavior of Mauritanian: An Application of TRA

This paper is aimed at examining the role of awareness and the applicability of the theory of reasoned action (TRA) in predicting the intention of people to patronize Islamic Banks in Mauritania. A total of 227 respondents were involved and structural equation model was used to measure the relationship between the exogenous and endogenous variables in the model. The results have shown that TRA is a valid model in predicting the intention of Mauritanian to patronize Islamic banks in Mauritania. Attitude and subjective norm were found to have a positive influence upon the intention to patronize Islamic banks. It was also proven that awareness has a positive and significant influence upon the attitude and thus influences the intention of Mauritanian to patronize Islamic bank.

Service Quality Evaluation of Islamic Banks in UAE : An Importance-Performance Analysis Approach

The landscape of modern financial institution has seen its dominance not only by conventional banks but also Islamic banking system. The intense competition brought about due to this development has earned service quality an important determinant of customer loyalty. As such this study is aimed at evaluating the service quality of Islamic banks, particularly in the UAE. The analysis is done using descriptive statistics and importance-performance analysis method. The finding shows that attributes plotted in quadrant “concentrate here” are speedy approval of financing proposal, speedy approval of opening new account, cost of services and products, and Islamic working environment. It shows that the performance of those attributes needs to be improved in order to maintain existing and attract new customers. Meanwhile, attributes plotted in quadrant “possible overkill” are internet banking and variety of the banking products. Hence, effective and efficient services are still considered as the main factors affecting customer satisfaction and bank management should wisely and carefully manage those attributes in the future.

Competitive condition and market power of Islamic banks in Indonesia

Purpose - The purpose of this study is to examine the competitive conditions and market power of Islamic banks in Indonesia for the period of 2006-2013. Design/methodology/approach - Using samples of 27 Islamic banks, the study uses a variety of structural and non-structural measures related to the traditional approach and the new empirical approach of the industrial organization. The methodology is based on set of measures of the competition and market power. The first measures, concentration ratios and Herfindahl-Hirschman index, are to determine the competitiveness level while the second measures of Panzar and Ross H-statistic and Lerner index are to examine the market power of Islamic banks in Indonesia. Findings - The finding of this study has confirmed the situation of Islamic banking industry in Indonesia which is operated in a higher degree of market power which lead to a less competitive market. Islamic banks earn their revenues under monopolistic competition over the tested period. This study has also found a negative but insignificant relationship between concentration and competition which shows that in the last few years, the market power for leading firms in Indonesia Islamic banking industry has reduced. Practical implications - The paper is a very useful source of information that may provide relevant guidelines in guiding the future development of competition of Islamic Banking industry. As well, the paper provides relevant guidelines for improving competitiveness of Islamic banks. Originality/value - This study combines two approaches for bank competition measurement and bank market powers measurement which can provide more robust findings. To the best of the authors’ knowledge, the study on Islamic banking competitiveness level and market power is very limited, especially in the case of Indonesia. Therefore, this study could contribute significantly towards the literature of the related field.

Factors Influence Customer Loyalty in Kuwait Islamic Banks : An Exploratory Study

Protecting market share against rival firms is more important than ever due to the decline in market growth rate and the increase in the competition. The main requirement for protecting market share is to create loyal customers. Therefore, the main objective of this paper is to examine interrelationships between service quality, emotional satisfaction, and image on loyalty of Islamic bank customers. By using online survey‚ data of this study were collected from 600 Kuwait Islamic banking customers. The finding shows that emotional satisfaction is the only significant variable affecting the loyalty. This study provides useful information for Kuwait policy makers and bankers on how to improve loyalty of customers in Islamic banks which in turn increases the profitability of the banks.

Factors Influence Switching Behavior of Islamic Bank Customers in Malaysia

An Islamic bank is now not only facing competition from its peer Islamic banks but also from conventional bans, which offer Islamic banking products through their Islamic subsidiary. When the competition becomes tougher, customers are given more options to choose their banks and switch from their current bank to other Islamic banks. Thus, the objective of this study is to evaluate factors influence the switching behavior of Islamic banking customers, in the case of Malaysia, based on the syariah compliance issues. Using logistic regression, the results show that the customer’s religion, type of account, and whether or not they have account in conventional bank are the significant factors to influence their switching behavior when they encounter non-syariah products and practices in their Islamic bank.

Economic and market predictors of solvency of family takaful in Malaysia

Purpose The purpose of this study is to empirically study firm-specific and economic factors affecting solvency of family takaful companies in Malaysia. Design/methodology/approach Data are extracted from the annual reports of six family takaful companies and Bloomberg for the period from 2008 to 2012. Equity-to-asset and equity-to-technical reserve ratio are used to measure solvency and thus become the dependent variables. Meanwhile, profit rate, Islamic index, company size, risk retention, contribution growth, investment income, takaful leverage, liquidity and expenses are the independent variables. Findings The determinants that are positively related to equity-to-asset ratio (EAR) of family takaful include contribution growth, investment income, takaful leverage, liquidity and Islamic equity index. Meanwhile, company size, risk retention, expenses and profit rate are negatively related to EAR of takaful. Equity-to-technical reserves ratio (ETR) of takaful are positively related to risk retention, contribution growth, investment income, takaful leverage, profit rate and Islamic equity index. The other variables including company size, liquidity, and expenses are negatively related to ETR of takaful. Originality/value This study explores factors affecting the solvency of family takaful, which to the best of the authors’ knowledge is still lacking empirical research which may improve the understanding of this issue.

Competitive Condition and Market Power of Islamic and Commercial Conventional Banks in Indonesia

This study aims to examine the competitive conditions and the market power of the Islamic and conventional banks using firm level data over the period 2006–2013 in Indonesia. Using samples of 27 Islamic banks and 106 conventional commercial banks, the study uses a variety of structural and non-structural measures related to the traditional approach and the new empirical approach of the industrial organization. The methodology is based on set of measures of the competition and market power. The results of the competition analysis suggest that the banking markets of Indonesia cannot be characterized by the bipolar cases of either perfect competition or monopoly over 2006–2013. That is, banks earned their revenues operating under conditions of monopolistic competition in that period. Islamic banks in Indonesia operate in a relatively less competitive environment compared to conventional banks, or in other words, market power is higher in Islamic markets compared to conventional commercial markets.

Stock markets and economic growth: a comparative analysis between Islamic and conventional markets in Malaysia

This paper aims at examining the impact of Islamic and conventional stock markets upon the macroeconomic performance in Malaysia. Real GDP is used to represent economic growth; while Islamic market capitalisation ratio and conventional market capitalisation ratio are used to indicate the Islamic and conventional stock market development, respectively. Investment ratio and GDP deflator are added as controlled variables for both models. The results shows there is a bidirectional relationship between Islamic stock markets and economic growth in Malaysia, and the contribution towards the economic growth is seemed to be indirectly through its impact on investment. On the other hand, there is a unidirectional relationship between conventional stock markets and economic performance in Malaysia, in which the development of conventional stock market causes the growth. Interestingly, the impact of the development on conventional stock market upon economic growth is more than the impact of the Islamic one. The exogeneity test shows that both the Islamic and conventional stock markets development is found to be super-exogenous.

The Susceptibility of Islamic Banks' Credit Risk Towards Macroeconomic Variables

Credit risk is the most anticipated risk in the banking system. It is one of the key elements to assess systemic risk and stress testing financial fragility which is very helpful to come up with macro-prudential surveillance in financial systems. Unlike the conventional banking system, there is dearth of empirical study on macro-credit risk in relation with Islamic banking. As such, further research regarding the stability of the Islamic banking industry has become imperative. Accordingly, this paper is aimed at determining and assessing the long run vulnerabilities of Islamic financing sustainability in term of its response to changes in key macroeconomic variables by using time series econometric approaches of cointegration and vector autoregression (VAR). Based on the result of simulating variance decomposition (VD) and impulse response function (IRF), it is found that, sufficient evidence of long-run relationship between credit risk ratio in Islamic banking industry and the selected macroeconomic variables exist. The exchange rate, supply side-inflation, and growth have been indicated to negatively influence credit risk rate in Islamic banking, while money supply and Islamic interbank money market rate positively affect the risk rate.